Industry Interest Alive and Well in Alaska

December 16, 2016 in Blog

When the Department of Interior released its final OCS leasing Plan for 2017-2022, it noted industry’s “declining interest in the Arctic OCS” as one justification for removing the two Arctic leases included in the initial Plan. This statement disregarded the deluge of industry comments that flooded the Bureau of Ocean Energy Management’s (BOEM) inbox during the official comment period. BOEM moved ahead with its final Plan and disregarded the sizable interest in the region that the industry expressed to the agency.

Once the final (Arctic-less) Plan was announced companies, associations, and Alaskan leaders quickly responded with statements expressing their disapproval. Each noted that BOEM’s lack of interest suggestion was false.

This week, exploration companies proved (yet again) that they are interested in the Alaska’s resources, but this time they did so with actions instead of words. On Wednesday, the Bureau of Land Management (BLM) and the Alaska Division of Oil and Gas each held a lease sale in Anchorage, putting state and federal leases up for auction. Officials associated with the lease sale said they were surprised by the high number of bids they received.  The revenue associated with both of the lease sales is sizable.

At the Alaska Division of Oil and Gas sale, over 633,000 acres of Beaufort Sea and North Slope tracts were sold for a whopping $17.8 million.  BLM received $18.8 million from the NPR-A lease sale it conducted, and the state of Alaska will receive $9.4 million of that. At the BLM sale, the agency received 92 bids for 67 lease tracts – the most it has received since 2010. The revenue windfall from the state sales is a welcome boost for Alaska, which has been hit hard by the low price environment.

Governor Bill Walker expressed his delight for lease sale results saying:

“This is great news—for the state and the industry. As Alaska grapples with a $3.5 billion deficit, these $17.8 million oil and gas lease sales are the first stage to getting much-needed production in our state.”

Chantal Walsh, Oil and Gas Division Director commented on the investment attractiveness of the state:

“Today’s lease sale results are very encouraging and demonstrate that the state of Alaska remains highly attractive to companies and investors interested in exploring and developing untapped hydrocarbon resources.”

Despite low oil prices, it’s clear that oil and gas companies see Alaska’s OCS region as a sound investment. Familiar names like Armstrong, Eni, and ConocoPhillips made a strong showing at the lease sale, but new players like Houston-based Burgundy Xploration also made moves to grab North Slope tracts.

The industry has made it abundantly clear that they are interested in Alaska’s onshore and offshore energy opportunities. There should have been no doubt in the leasing officials’ minds that companies would show up for the auction and were willing to pay to play. Hopefully the massive investments made by exploration companies this week will settled the question of “interest” once and for all.

The oil and gas industry wants to develop Alaska’s energy resources. It’s time for regulators to recognize this interest, so that it can develop into actions and economic opportunities for Alaska and the rest of the nation.